Last Updated: Tue Nov 02, 2010 17:46 pm (KSA) 14:46 pm (GMT)

Poor Somali towns boom as piracy reaps profits

Pirates have raked in more than $120 million in ransom money this year
Pirates have raked in more than $120 million in ransom money this year

In an impoverished country where every public institution has crumbled, Somalia's increasingly brazen pirates have become heroes in the steamy coastal dens they operate from because they are the only real business in town.

As dawn breaks over the Indian Ocean each morning, elders in Somali pirate bases sip strong coffee and clutch mobile phones to their ears, eager to hear the latest from the gunmen out at sea.

Have any more ships been hijacked or ransom talks concluded? Any news of the Western warships hunting them?

According to the U.N. top envoy for Somalia, the pirates have raked in more than $120 million

In northern coastal towns like Harardhere, Eyl and Bossaso, the pirate economy is thriving thanks to the money pouring in from pirate ransoms.

According to the United Nations' top envoy for Somalia, the pirates have raked in more than $120 million in ransom money since the start of 2008.
Pirate activity has grown into a small but profitable industry in one of the world's poorest countries.

"Apart from those who take part in the operations, who currently number more than 1,000, there are those who provide services ranging from negotiations with ship owners, procurement of weapons, training of pirates, information gathering, logistics and so on," said Ismail Ahmed, a British expert with 20 years' experience of Somali financial and development issues.

Rapid Development

Last month’s spectacular capture of a Saudi Arabian supertanker loaded with oil worth $100 million has jacked up the stakes in what is probably the only growth industry in the failed Horn of Africa state.

Massive ransoms have brought rapid development to former fishing villages that now thrive with business and boast new beachside hotels, patronized by cash-rich buccaneers who have become local celebrities virtually overnight.

"There are some 'pirates' who never shoulder a gun or go out into the ocean, but they own boats which earn them a hell of a lot of money," gang member Bashir Abdulle told Reuters by phone from Eyl, the most notorious of the pirates' strongholds.

Just three years ago, maritime security experts estimated there were just five Somali pirate groups and fewer than 100 gunmen in total. Now they think there are more than 1,200.

Biggest lure

 I know piracy isn't good, but if it wasn't for them I wouldn't be able to make a living 
Kadija Duale

The biggest lure, of course, is the vast ransoms being paid for captured ships.
According to the United Nations' top envoy for Somalia, the pirates have raked in more than $120 million in ransom money since the start of 2008.

Many young men who used to work as bodyguards and militia fighters for Somalia's many warlords and feuding politicians have quit with their guns to chase the rewards available out on the waves.

Residents make sure the pirates are well-stocked and aren't afraid to gouge a bit when it comes to the pirates' deep pockets.

"I know piracy isn't good, but if it wasn't for them I wouldn't be able to make a living," shrugs Kadija Duale, a mother of four in Eyl. She sells the gunmen $3 cups of tea on credit, then collects when they receive their share of ransoms.

Thanks to pirate demand, a kilo of khat, a popular mild narcotic plant, now costs $65 in Eyl, compared to $20 elsewhere.

Live like kings

 They live like monarchs, like kings. They do everything in public, without the need to hide or disguise the source of money 
Hany Aby-El-Fotouh

Eyl is in the semi-autonomous northern province of Puntland -- whose main port is Bosasso -- though the Saudi ship was held further south in Haradheere port, another center of piracy.

"They live like monarchs, like kings. They do everything in public, without the need to hide or disguise the source of money," said Hany Aby-El-Fotouh, an Egyptian banker and anti-money laundering specialist.

As the profits from the crime wave draw in businessmen from around the country, residents in the pirate's coastal bases -- and some inland towns -- have seen development in recent months that is unprecedented in their anarchic nation.

Residents in the coastal bases have seen unprecedented development in recent months

Towns that once were eroded by years of poverty and chaos are now bustling with restaurants, Internet cafes and fancy cars. Residents also use their profits to buy generators — allowing full days of electricity, once an unimaginable luxury in Somalia.

Abdiqadir Yusuf Ow Muse, mayor of Eyl, said his village had existed since 1927, but had long been only a tiny fishing community. This year, he told Reuters, all that had changed.

"Now it's a district with almost all facilities you would expect, because of the convergence of rich pirates," he said.

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